Star Cement (540575) Q4 09/10 earnings summary

Executive summary

• FY10 consolidated net sales rose 14.06% to Rs. 45,130.87 lac; profit after tax reached Rs. 12,315.59 lac, the highest reported to date.

• EBITDA increased 17.81% to Rs. 15,949.65 lac, with margin expanding to 35.34% on improved realisations, lower costs and higher output.

• The regional leader held 19% of Northeast India’s cement market and plans to expand capacity from 1 MTPA to 4 MTPA by 2013.

Financial highlights

• Consolidated net sales were Rs. 45,130.87 lac versus Rs. 39,568.95 lac in FY09; average net sales realisation increased 11%.

• Consolidated profit before tax was Rs. 12,900.39 lac versus Rs. 10,148.86 lac; profit after tax after minority interest was Rs. 12,315.59 lac versus Rs. 9,701.67 lac.

• Consolidated EPS increased to Rs. 29.38 from Rs. 23.14; gross cash accruals were Rs. 14,567.85 lac.

• Cement production rose 4.87% to 917,853 MT; sales volume increased 4% to 910,664 MT.

Outlook and guidance

• Cement demand growth is expected at 9–9.5% over the next couple of years, supported by infrastructure, housing and rural development.

• Expansion work began in FY10; volumes and profits are expected to rise as projects start from 2011 and come on stream in 2013.

• Planned capacity growth to 4 MTPA includes a 1.75-MTPA clinkerisation project and 1.6-MTPA grinding units at Guwahati and Kahalgaon.